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Ireland's Economic Landscape: Insights into the 2008 Crisis and Reforms

This article examines the economic developments in Ireland leading up to the 2008 financial crisis. It details the construction of the Central Bank of Ireland, the rise in property prices, and the significant impact of risky lending practices during the property bubble. The piece discusses government fiscal measures, the restructuring of the banking sector, and strategic reforms aimed at restoring economic stability. Additionally, it assesses the role of the European Central Bank in maintaining price stability and outlines the repercussions of both domestic and global economic events on Ireland’s economy.

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Ireland's Economic Landscape: Insights into the 2008 Crisis and Reforms

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  1. Ireland 2007 Troy Carpenter, Cody Hultman, Wendiam Sawadgo, Hannah Bochsler

  2. Irish Government • A sovereign state with a constitutional republic • Separation of power • President: Michael D. Higgins

  3. Regional Government • Under the federal government there are regional governments much like the United States

  4. Central Bank of Ireland • Became a unified body in 2010 • Member of the European Central Bank

  5. European Central Bank • Conducts monetary policy for the Eurozone • Maintain price stability within Eurozone at 2% inflation

  6. Policy Makers • Executive board determines the actions of the ECU

  7. Causes of the Recession • Mid 1990’s to early 2000’s: Ireland was “catching up” to the rest of the EU • Mid 2000’s to 2007: Ireland experienced strong economic growth • Property prices rise four-fold between 1997-2007

  8. Property Bubble • Supported by a surge in bank lending • Banks traditionally relied on their deposit base to fund lending activity • Increase in risk

  9. Housing prices http://www.esri.ie/irish_economy/

  10. Comparison to US/UK

  11. Property Bubble Burst • Increasingly risky lending practices proved highly damaging • Fraction of non-financial private-sector lending, that went to property sector, rose from 60% to 80% • Domestic spending falls by almost 30%

  12. http://ec.europa.eu/ireland/economy/irelands_economic_crisis/index_en.htmhttp://ec.europa.eu/ireland/economy/irelands_economic_crisis/index_en.htm

  13. Government Receipts vs. Expenditure http://www.esri.ie/irish_economy/

  14. GDP/GNP Growth http://www.esri.ie/irish_economy/

  15. Bank Loan Performance The World Bank

  16. Unemployment The World Bank

  17. Inflation/Deflation The World Bank

  18. Inflation/Unemployment

  19. Unemployment levels

  20. Government Debt The World Bank

  21. Exchange Rate The World Bank

  22. Stock Market

  23. Reforms by Government • Nov 29, 2010 Ireland negotiated a financial assistance package of 85 billion Euros • 17.5 Billion came from Irelands own resources • Creation of Central Bank of Ireland • Deals with financial regulation and central banking practices

  24. Banking Sector Reforms • Two universal pillar banks were created from the country’s two largest banks • To compete with each other, and any banks operating in Ireland • Multiple new supervisory frameworks put in place at the bank, regulatory, and state level • Retail vs. Wholesale bank systems • Risk experts regulation panel

  25. Fiscal Consolidation • Support economic growth through competitiveness • Contain the increase in government debt • Restore expenditures and taxation to more sustainable levels • 2009-2010 consolidation was mainly permanent budget cuts

  26. Structural Reforms • Strengthening the income tax base • Reduction of unemployment and welfare benefits

  27. Works Cited n.d. Central Bank of Ireland. Accessed April 16, 2014. http://www.centralbank.ie/Pages/home.aspx. n.d. European Central Bank: The Executive Board. Accessed April 16, 2014.http://www.ecb.europa.eu/ecb/orga/decisions/eb/html/index.en.html. 2012. Ireland's economic crisis: how did it happen and what is being done about it? February 22. Accessed April 16, 2014. http://ec.europa.eu/ireland/economy/irelands_economic_crisis/index_en.htm. n.d. Irish Economy. Accessed April 16, 2014. http://www.esri.ie/irish_economy/. Lane, Philip. n.d. The Irish Crisis. Accessed April 16, 2014. http://www.worldfinancialreview.com/?p=874. Organisation for Economic Co‑operation and Development. 15 October 2011. 22 April 2014. White, Timothy. 2010. "Celtic Collapse, or Celtic Correction?" New Hibernia Review 27-43.

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